Express Scripts' Miller says hepatitis C price war to save billions

NEW YORK (Reuters) - Gilead Sciences Inc and AbbVie Inc are in a price war over their hepatitis C treatments that is driving costs lower and has changed the way drugmakers price new medicines, a top executive for pharmacy benefit manager Express Scripts said on Thursday.

Gilead’s hepatitis C drug Harvoni, which can cure a majority of patients who take it, has a retail price of $94,500 and is now facing its first competition with AbbVie’s Viekira Pak, which was priced about $10,000 lower, or at $83,319.

Express Scripts was able to secure a discount that has brought the AbbVie price down to Western European levels for Gilead’s hepatitis C treatment, Chief Medical Officer Steven Miller told Reuters. Such prices overseas range from about $51,000 to $66,000.

The gap in price between Harvoni and Viekira has stayed about the same as both have fallen, Miller said.

The dynamic will save Express Scripts customers $1 billion in 2015, with a total of $4 billion in savings across the United States when all payers and employers are included, Miller said. He expects over 170,000 people will be treated for the liver-destroying virus in the United States in 2015, up from 100,000 last year.

“This is the first time in the history of the pharmaceutical industry that someone has been able to create a price war,” Miller said in an interview.

Gilead set off a national debate about the affordability of drugs last year after it priced its new hepatitis C drug Sovaldi at $84,000 per treatment, or about $1,000 per pill. That drug has been followed by a combination pill that is more expensive called Harvoni.

An estimated 3.2 million people in America have the virus, and many health insurers and payers said the cost of treating all of them would be unaffordable.

Express Scripts Holding Co, the nation’s largest pharmacy benefits manager, has been the most vocal critic of Gilead for its pricing. When U.S. health regulators approved AbbVie’s Viekira Pak in late December, Express Scripts announced within days that it was dropping coverage of Gilead’s treatments from its largest list of reimbursable drugs, except under certain medical exceptions.

Express Scripts and its clients are reaping new savings as prices head lower from both Gilead and AbbVie, but that will not change Harvoni’s place on its reimbursement list in the near future.

“They cannot buy their way back onto the national preferred formulary at this time,” Miller said of Gilead. Express Scripts’ agreement with AbbVie spans multiple years but Miller declined to say how many.

Beyond hepatitis C, other drugmakers are showing much more willingness to discuss pricing early on in the development of new treatments, Miller said. That includes more detailed talks on how many patients would most benefit from a new therapy.

The industry is closely watching two new areas to see how the pricing dynamics will play out - PCSK9s for high cholesterol and PD-1s for cancer.

“More companies are coming to us, telling us about their pipeline and wanting to know what kind of data we want to see,” Miller said.